The challenges of 2020 have brought forward an excellent opportunity to reassess how we run our food-and-beverage operations. But until the service-charge trap is eliminated, service charges will continue to work against what all clubs value the most in their F&B operations.
By Nick Bailey, PGA • General Manager
Lake Merced Golf Club • Daly City, Calif.
Many years ago, service charges were introduced as a problem-solver for the private-club industry. The idea was seen as being great for eliminating issues with the bad tipper or the forgetful member. Members who were late for their tee times would no longer need to sign chits; cash would no longer be needed, and clubs could offer a great rate of pay to their service staff by having high service-charge payouts and the use of outside events help to cover the associated labor costs.
Many clubs have since looked for ways to increase their service charges (some have increased them from 18% to 20% for outside events), with the idea that increasing the compensation will improve the service that club members receive.
Yet member clubs continue to struggle with food-and-beverage issues more than any other department. Boards and club managers spend countless hours in the boardroom, reviewing how to improve member service while not adding to what the club is losing in F&B.
If you were to rank the importance of services at a club, member dining will always come out as among the most important. Having Ashley who always remembers you like two sugars in your iced tea, or Luis who knows you like your burger with sliced pickles instead of on the side, or Daniel who stays open an extra 15 minutes to serve you a cold beer, even though you are the only member left on the course—all of them cannot be overlooked as key factors for member satisfaction and contributors to an extremely valuable experience. Having your preferences known is why people are, and will continue to be, members of a private club.
Yet a club’s compensation model with service charges has an inverse relationship to its most desired skill sets. Banquets with large parties, expensive dinners and drinks lead to big service charges. Monday golf events where 140 players eat a box lunch are lucrative events for your serving staff, as they are low on effort but high on compensation. A Tuesday group of tough bridge ladies who order a water and half a sandwich brings $9 for the server who works that table, yet a business meeting for which the server places pastries, sodas and bottled water in the boardroom brings $75.
Management of these service charges has increasingly become a burden on department managers, and especially in California, where current and future litigation makes these service-charge payouts even more dangerous for potential club liability.
Service charges, simply put, are just another hidden dues fee that a private club member incurs, and they would be better treated as such. In California, service charges are also taxable—another hidden cost that the membership could avoid.
In any normal club operation, you would compensate your employees based upon their service and value to the membership. A better approach would be to raise dues and facility fees for outside events and to empower your management staff to find the people who get the most joy out of going the extra mile for your members. Compensate them appropriately, to reflect the goals of club members.
The challenges of 2020 have brought forward an excellent opportunity to reassess how we run our food-and-beverage operations. But until this common trap is eliminated, service charges will continue to work against what all clubs value the most in their F&B operations.
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